40 Minutes on Business Model Innovation

Slide 1: Your Business Model how to identify and improve it La Trobe University, Melbourne, July 2007

Slide 2: what’s on the menu today?

Slide 3: the alchemy of business model innovation

Slide 4: first: what are your expectations for today?

Slide 5: example of business model innovation

Slide 6: waste water treatment systems

Slide 7: waste water Canadian distribution customer treatment offer sales force mining channel segment system sites revenue one time stream sales fee

Slide 8: idea!

Slide 9: total waste water sell waste water Canadian sales force treatment treatment system mining sites management recurring one time servicefee sales fee

Slide 11: let’s do an exercise to understand

Slide 12: distribution client offers channels segments personal banking your client consulting your offers your channels network executives segments banking dedicated banking knowledge website professionals training program

Slide 13: partner client suppliers follow-up network relationship sell waste water build core water Canadian treatment treatment core activities sales force treatment capabilities mining sites knowledge systems system production one time costs costs sales fee

Slide 14: suppliers follow-up call center water build total waste water error free Canadian dispatch treatment treatment treatment sales force systems mining sites repair teams knowledge systems management development variable costs production recurring of repair costs service fee services

Slide 15: business model template INFRASTRUCTURE OFFER CUSTOMER PARTNER CUSTOMER NETWORK RELATIONSHIP CORE VALUE TARGET CAPABILITIES PROPOSITION CUSTOMER VALUE DISTRIBUTION CONFIGURATION CHANNEL COST REVENUE FINANCE STRUCTURE STREAMS http://business-model-design.blogspot.com

Slide 16: the basics of identifying and improving business models

Slide 17: 4. implement 1. describe it 2. discuss it 3. improve it it

Slide 18: 1. describe it

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Slide 20: 2. discuss it

Slide 21: but there is no common language

Slide 22: 3. improve it

Slide 23: we don’t really have the tools

Slide 24: 4. implement it

Slide 25: Ok Here Here CEOs 10° Managers 60° everything else than Staff 360° planned

Slide 26: the main challenge

Slide 27: think outside-of-the box

Slide 28: “ insanity: doing the same thing over and over again and expecting different ” results Albert Einstein

Slide 29: enabling business model innovation

Slide 30: user-centered

Slide 31: creativity & exploration

Slide 32: interdisciplinary approach

Slide 33: strategic fit

Slide 34: more examples

Slide 35: what’s the connection?

Slide 36: client partners relationship precision mechanical luxury micro- activities channels patients joints watches buyers engineering revenue costs streams

Slide 37: Cemex example

Slide 38: client partners relationship cement delivered on time core fleet cement by during time activities channels builders competencies delivery management cubic meter window revenue costs streams

Slide 39: the business model design process

Slide 40: 1. identify interdisciplinary stakeholders -> set-up team

Slide 41: 2. understand (business) environment –> frame problem

Slide 42: 3. suspend reality -> ideate

Slide 43: 4. bring back reality -> prototype

Slide 44: 5. chose suitable design -> decide

Slide 45: 6. execute -> project portfolio

Slide 46: 7. evaluate, learn and redesign -> manage improvement

Slide 48: Alexander Osterwalder, PhD alex@arvetica.com www.arvetica.com

Slide 49: all photos from Flickr under a creative commons license authors indicated in comment page of ppt

Slide 50: annex I other

Slide 51: the business modeler’s toolbox

Slide 52: co-creation

Slide 53: ideation

Slide 54: visualization

Slide 55: prototyping

Slide 56: some examples

Slide 57: Goldcorp “geology prize” CUSTOMER 500’000 $US RELATIONSHIPS exploiting CUSTOMER mining mines SEGMENTS DISTRIBUTION research CHANNELS low costs through REVENUE open exploration STREAMS Goldcorp publicly shared all of its geological data and offered US$ 500’000 in prizes for determining where they might find the next 6 million ounces of gold

Slide 59: from copyright to creative commons

Slide 60: Skype “eBay” website deliver voice & free VoIP & value global video quality added services (non segmented) software internet development software large scale development low margin free voice-over-IP VoIP telephony & value-added services

Slide 61: 1291 Cityhomes low-cost hotel/rental in New York City young curious Swiss CUSTOMER RELATIONSHIPS apartment owners keep down low cost DISTRIBUTION the cost renting out costs accommodation CHANNELS sensible rooms New York find demand low cost rents

Slide 62: Tecnovate “import” young CUSTOMER curious RELATIONSHIPS Europeans to India to work low-cost multi- ACTIVITY DISTRIBUTION keep down lingual call European CONFIGURATION CHANNELS costs center corporations outsourcing REVENUE low cost STREAMS business process outsourcing “up-side down” in India

Slide 63: from bloated head to the long tail

Slide 64: PARTNER CUSTOMER NETWORK RELATIONSHIP INFRASTRUCTURE CUSTOMER regular ad mobile network CORE OFFER messages via operator that CAPABILITIES mobile phone “rents out” increasing the capacity to Blyk VALUE TARGET number of mobile PROPOSITION CUSTOMER phone users with DISTRIBUTION FREE advertising the young and the the right profile to CHANNEL supported mobile hip increase the VALUE telephony subscribers fill out value for CONFIGURATION advertisers profile on the advertisers access to a pool finding and Internet of targeted young contracting advertising public advertisers sales force marketing to mobile users with an interesting advertising profile paying mobile phone minutes FINANCE marketing advertising fees COST STRUCTURE REVENUE STREAMS

Slide 65: annex II business model template

Slide 66: INFRASTRUCTURE OFFER CUSTOMER PARTNER CUSTOMER NETWORK RELATIONSHIP CORE VALUE TARGET CAPABILITIES PROPOSITION CUSTOMER VALUE DISTRIBUTION CONFIGURATION CHANNEL COST REVENUE FINANCE STRUCTURE STREAMS a business model describes the value an organization offers to various customers and portrays the capabilities and partners required for creating, marketing, and delivering this value and relationship capital with the goal of generating profitable and sustainable revenue streams

Slide 67: describing a company’s business model PARTNER CUSTOMER INFRASTRUCTURE CUSTOMER NETWORK RELATIONSHIP OFFER CORE TARGET portrays the network of explains the CAPABILITIES CUSTOMER cooperative relationships a agreements with other company establishes VALUE companies with its customers PROPOSITION outlines the capabilities describes the required to run a customers a company company's business wants to offer value to model DISTRIBUTION gives an overall view of VALUE CHANNEL a company's bundle of CONFIGURATION products and services describes the channels describes the to communicate and get arrangement of in touch with customers activities and resources sums up the monetary describes the revenue COST REVENUE FINANCE consequences to run a streams through which STRUCTURE STREAMS business model money is earned

Slide 68: describing a company’s offer OFFER VALUE PROPOSITION value proposition 1 value proposition 2 …

Slide 69: describing who a company offers value to OFFER CUSTOMER VALUE TARGET PROPOSITION CUSTOMER value proposition 1 target customer 1 value proposition 2 target customer 2 … …

Slide 70: describing how a company reaches its customers OFFER CUSTOMER VALUE DISTRIBUTION TARGET PROPOSITION CHANNEL CUSTOMER value proposition 1 distribution channel 1 target customer 1 value proposition 2 distribution channel 2 target customer 2 … … …

Slide 71: describing the relationships a company builds OFFER CUSTOMER VALUE CUSTOMER TARGET PROPOSITION RELATIONSHIP CUSTOMER value proposition 1 relationship type 1 target customer 1 value proposition 2 relationship type 2 target customer 2 … … …

Slide 72: describing how a company makes money OFFER FINANCE CUSTOMER VALUE REVENUE TARGET PROPOSITION STREAM CUSTOMER value proposition 1 revenue stream 1 target customer 1 value proposition 2 revenue stream 2 target customer 2 … … …

Slide 73: describing what capabilities are required INFRASTRUCTURE OFFER CORE VALUE CAPABILITIES PROPOSITION core capability 1 value proposition 1 core capability 2 value proposition 2 … …

Slide 74: describing what activities are required INFRASTRUCTURE OFFER CORE VALUE VALUE CAPABILITIES CONFIGURATION PROPOSITION core capability 1 activity 1 value proposition 1 core capability 2 activity 2 value proposition 2 … … …

Slide 75: describing the partners that leverage the business model INFRASTRUCTURE OFFER CORE PARTNER VALUE CAPABILITIES NETWORK PROPOSITION core capability 1 partner 1 value proposition 1 core capability 2 partner 2 value proposition 2 … … …

Slide 76: describing the costs of a business model INFRASTRUCTURE FINANCE OFFER CORE COST VALUE CAPABILITIES STRUCTURE PROPOSITION core capability 1 cost account 1 value proposition 1 core capability 2 cost account 2 value proposition 2 … … …